The division bench of Himachal Pradesh High Court has dismissed the petitions filed by Himachal Pradesh Chief Minister Virabhadra Singh, his wife Pratibha and son Vikramaditya challenging the orders of Income Tax (I-T) department to reassess their revised returns.
A division bench of Justice Sanjay Karol and Justice Vivek Singh Thakur after going through the records said that orders passed by the income tax commissioner were legally correct.
The Petitioners had challenged the Income Tax department order on the ground that it has erred in issuing notice for reassessment on the basis of revised returns, whereas the agricultural income is non-taxable under Income Tax Act.
It is the pleaded case of the petitioner that (a) reopening of the case is bad in law and facts, (b) there is no escapement of any income, for investment came to be made by the HUF, which fact, was known to the Assessing Officer, as very same action also stood initiated against the said entity, (c) there was no material before the Assessing Officer enabling him to form reasons of belief of escapement of any income, (d) sanction accorded is in a mechanical manner, much less without any application of mind, (e) order rejecting the objections is non speaking, (f) by exceeding jurisdiction, the Assessing Officer committed grave illegality in initiating the impugned action.
On the other hand, it is the pleaded case of the Revenue that (i) though in the original return, petitioner declared her income to be `4,81,340/-, but none was from agricultural source. (ii) Factum of purchase of Insurance Policy, never came to be reflected in the return filed for the relevant year. (iii) Only on receipt of information from the Office of Life Insurance Corporation of India, Shimla, such fact came to be discovered. (iv) Even in response to the notice under Section 148 of the Act, source of such investment never came to be disclosed. (v) As such on 23.05.2006, in compliance of Section 142(1) of the Act, a detailed questionnaire was issued to her. (vi) Proceedings initiated with respect to the HUF could not be completed, for on her asking, further proceedings are stayed by this Court. (vii) The income still remains un-assessed.
While the dismissing the petition, the division bench observed that, It cannot be said that rejection of the objections are based on frivolous or extraneous factors and circumstances. There is complete and proper application of mind to the attending facts and circumstances. The objections rejected, by a speaking order also stand duly communicated to the petitioner. Mere rejection of objections would not lead to formation of opinion about the Assessing Authority under all circumstances deciding the matter in favour of the revenue. No material stands placed before us justifying investment of huge amount out of the declared income of HUF. It is not that the assessment is precluded from producing such material before the Assessing Officer.
Read the full text of the Judgment below.
